Question

You discover that the client's previous tax returns from last year, which someone else prepared, listed a deduction of $3,000 in excess of the actual expenditure. This mistake was not intention and the IRS will probably not detect the error. You can change the error, which might cost the client additional liability. Another option would be to prepare the return from the previous year so that the mistake was yours. Create a price structure for each option. Indicate to the client that you want to meet to discuss these options.

For this assignment, feel free to add any additional information that you feel the client would want to know about each option (this can come from your own experiences, knowledge from other courses, etc).  You can be creative with some of the information in the memo, such as name, date, etc.

Answer 1

We assume that the client name is John and the wrong return was filed for last year 2017.

Case 1 - Inform to client about correction of mistake through mail

Hi John,

I was preparing your tax return for the current year 2018 and for that purpose I have checked your last year return in which I have found that in last year $3000 of expenditure were claimed in access mistakenly, therefore in current year it is required to be make correct. Due to that there would be an additional tax liability on $3000 and also interest for delayed payment of Tax.

I would like to meet you personally and discuss the details related to the issue.

Case 2 - Inform to client about carry on return from last year through mail

Hi John,

I was preparing your tax return for the current year 2018 and for that purpose I have checked your last year return in which I have found that in last year $3000 of expenditure were claimed in access mistakenly, now we can prepare your tax return for the current year from previous year with ignoring the mistake that was made last year. As there is a chance that IRS authority can find that mistake in future and at that time we have to pay our liability amount, but with this option we can save our amount of liability at present.

I would like to meet you personally and discuss the details related to the issue.